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Impact of VAT Exemptions in the Postal Sector on Competition and Welfare

  • Helmut Dietl

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

  • Christian Jaag

    ()

    (Institute of Public Finance and Fiscal Law, University of St. Gallen)

  • Markus Lang

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

  • Martin Lutzenberger

    ()

    (Lucerne University of Applied Sciences)

  • Urs Trinkner

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

In most member states of the European Union (EU), universal postal services provided by the incumbent operator are exempt from value added taxes (VAT) on the grounds that they are the Òpublic postal service.Ó Other postal service providers have to charge VAT at the standard rate. The paper sheds light on the main competitive impact of VAT policies while showing the consequences on overall welfare. We show that the results are very sensitive to the operatorsÕ labor policies. Consequently, VAT exemptions have a different impact in countries with different labor regulations. The comprehensive treatment of competition and welfare enables us to provide guidance on how to resolve the policy trade-off between consumer surplus, government tax revenue, and a level playing field in liberalized postal markets.

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File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/145_ISU_full.pdf
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0145.

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Length: 15 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:iso:wpaper:0145
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